Alibaba Rival JD Envisions Its Own Delivery Drone Fleet in China by End of 2017

JD.com via Bloomberg News

JD.com via Bloomberg News

From Amazon.com Inc. to Domino’s Pizza, technology giants and retailers have dreamed of drone deliveries for years. One Chinese e-commerce giant intends to make it a full-fledged reality by 2017.

JD.com Inc. has drawn up plans for drones to ply 100 regular routes by the end of next year. Taking advantage of less-restrictive regulations, it’s spent months testing its drones and beginning Nov. 10 — the same day as China’s annual 24-hour online shopathon — it intends to start operating four routes delivering packages to rural residents on a trial basis.

JD.com competes with Alibaba Group Holding Ltd. in selling everything from smartphones to salami to a rising middle class. But unlike Alibaba, it operates much of the logistics pieces needed to convey its goods, a costly undertaking that’s prompted the company to look for ways to heighten efficiency. Drones could be the solution in hard-to-reach locales, where deliveries can cost up to six times more than a city trip because the denser populations help spread the expense.

“By the end of next year we’ll hopefully have over 100 routes available and in operation,” said JD.com’s chief technology officer, Chen Zhang. “This is something we look at as a long-term project. The benefits are tremendous if we get it into the most expensive areas of China.”

When a customer places their order, a package is sent from the warehouse or distribution point to a delivery station. Workers hook up the package to one of five drone types, which zip over to a rural village contractor who then makes the final delivery to the buyer’s doorstep. JD.com has a network of around 300,000 contractors, whom it calls promoters, to cover an estimated 600,000 villages.

“In some places, the villagers place an order and get the delivery in a few weeks. Now maybe it’ll come in a few days,” he said.

JD.com’s initial batch of five drones are all pre-programmed to suit different scenarios. The MSC1 is a short-hop device that resembles a tiny telephone booth attached to rotors, capable of carrying eight kilograms a distance of up to eight kilometers. The big rig of the bunch is the CT-120, with a gasoline engine and payload of as much as 15 kilograms that can travel 30 kilometers.

Amazon Chief Executive Officer Jeff Bezos popularized the idea of using drones to ferry parcels two years ago on a "60 Minutes" episode. A number of retailers and technology companies have since explored the possibility, including Alphabet Inc.’s Project Wing and Wal-Mart Stores Inc. They’ve come up against regulatory obstacles however: U.S. federal regulation doesn’t yet allow for delivery, except in select test zones.

The commitment of the different players varies. Project Wing is said to be pulling back on parts of its endeavor, while Amazon continues to plow money into research. Domino’s Pizza Enterprises Ltd. has joined forces with U.S.-based Flirtey to test what it calls the world’s first commercial drone pizza delivery operation, in New Zealand.

Zhang envisions a near future where drones form a crucial link between rural consumers and urban producers. Instead of building physical stations across a vast countryside, drone-laden trucks could be driven down distant highways to unleash a swarm of package deliveries.

“We’re not just playing around with technologies. We’re making social impacts,” he said.